Dispute resolution post-Brexit – various options but still no agreement

The future of UK-EU dispute resolution remains unresolved. Once the UK leaves the EU and becomes a third country, what mechanisms will or should exist to resolve disputes between the UK and the EU?

As we have noted previously, the UK position, as set out in the Government’s future partnership paper published in August 2017, acknowledged that that “a new dispute resolution mechanism” would be needed to resolve disagreements between the UK and EU arising out of UK-EU agreements. The paper identified various models – but made it clear that agreements concerning the UK’s future relationship with the EU would not be under the jurisdiction of the CJEU: “one common feature of most international agreements … is that the courts of one party are not given direct jurisdiction over the other in order to resolve disputes between them. Such an arrangement would be incompatible with the principle of having a fair and neutral means of resolving disputes, as well as with the principle of mutual respect for the sovereignty and legal autonomy of the parties to the agreement”. The point was repeated by the Prime Minister contended in her Mansion House speech.

However, notwithstanding the UK’s proposed approach, the draft withdrawal treaty published by the EU, aimed to retain a role for the CJEU. The draft provided that disputes between the EU and the UK will first be referred to a Joint Committee which is co-chaired by representatives from the EU and the UK. In the event that the Joint Committee is unable to resolve such disputes within three months from the date of referral, either party may refer such disputes to the CJEU.

To date, no agreement has been reached by the parties on this issue.

Recently, both the Law Society and the House of Lords European Union Committee have published papers considering possible dispute resolution mechanisms post-Brexit, although both start from the premise, in keeping with the UK’s stated position, that the CJEU will not have jurisdiction over the UK post-Brexit.

The Law Society proposes that the UK Government should seek to create a dispute resolution system separate from the CJEU, which has a connection with the UK’s legal systems and which should apply across all strands of the final UK-EU deal. Further, it recommends that there should be convergence between decisions made under the new dispute resolution mechanism, the UK courts and the CJEU – and consequently that there should be provision for dialogue between the UK and the EU where there is a danger of divergence in interpreting the terms of the agreement.

It is also of note that the Law Society recommends that the system should allow individuals to enforce rights granted under the UK-EU agreement.

In a similar vein, the House of Lords paper suggests that any enforcement and dispute resolution system established as part of the future relationship between the UK and the EU should be accessible by citizens and businesses, either directly or via a referral system, as their interests would be prejudiced if the new system operated only at state-to-state level.

However, the paper notes that in view of the UK’s Government’s red line that it does not want to be under the jurisdiction of the CJEU, there would need to be either a new court covering the same areas as the CJEU or multiple dispute resolution procedures.

Crucially, the report highlights that time is now very short, particularly with regard to agreeing a dispute resolution mechanism to cover disputes arising from the withdrawal agreement.

Brexit: planning for the future as negotiations continue

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